Contracts Mbe

Front 1

Contract Def.

Back 1

Legally Enforceable agreement
i) Express: Based on words (written or spoken)
ii) Implied: Requires conduct

Front 2

Quasi-Contract: Equitable remedy (3 rqmts)

Back 2

i)Plainitff conferred benefit
ii) Plainitff reasonably expected to be paid
iii) Def. unjustly enriched if Plain. not paid

Front 3

Bilateral K

Back 3

When acceptance of a K is open to both methods (express and implied)

Front 4

Unilateral K

Back 4

Offer EXPRESSLY requires performance as only method of acceptance

Includes prizes, awards, contests

Front 5

Common Law is Applicable if:

Back 5

K deals with real estate or service

Front 6

Art 1 and 2 UCC is applicable

Back 6

K is for Sale of goods

Front 7

Mixed Contracts: UCC or common law?

Back 7

Most Importantr Test: If sale of goods is most important part of K, UCC applies

Front 8

EXCEPTION to Mixed Contract
'Most Important Test'

Back 8

Divisible Payment Exception:
-Use when payment is divided by goods vs. services
-Apply UCC to goods, common law to rest

Front 9

Offers: General rule

Back 9

Manifestation/intent to K
by words or conduct

Objective test: would rp in oferee's position believe his assent created a K?

Front 10

Offers and Material Terms: Common Law

Back 10

Offer need not contain all material terms

Real Estate Exception: Must include PRICE & DESCRIPTION

Front 11

Offers: Material Terms, UCC

Back 11

K need not include price;
"offer is an offer if parties so intend"

Front 12

Offers: Vague or Ambiguous Material Terms

Back 12

Offers with vague material terms invalid under UCC AND common law
(ex."a fair price")

Front 13

Offers: Requirement/Output Contracts

Back 13

Quantity retermined by seller's outpurs or buyer's requirements generally valid

Exception: Limitations or increases must be reasonably proportionate

Front 14

Non-Offers

Back 14

Price quotes are generally not offers (unless in response to specific inquiry)

Ads are not offers unless:
(1)Reward
(2)Specific quantity and specific person who can accept

Front 15

Termination of Offers:
General

Back 15

Offer dies,can't be accepted if terminated.

5 ways to kill offer:
1. Time Lapse
2. Offeror's Words or Conduct
3. Irrevocable Offers(4 type)
4. Rejection of Offer(5 ways)
5. Death

Front 16

Termination of Offers:
Time Lapse

Back 16

i) Time stated expires
ii)Reasonable time lapses

Hint: 30 days+ probably a lapse. Watch for dates!

Front 17

Termination of Offers:
Offeror's Words or Conduct

Back 17

i) DIRECT STATEMENT to offeree not willing/able to K
ii)CONDUCT that Offeree is AWARE OF that indicates offeror not willing/able to K

Whether words or conduct, revocation of offer nmot effective until offeree RECEIVES IT.

IF OFFER IS ACCEPTED, CANNOT BE REVOKED

Front 18

Termination of Offers:
4 Types of Irrevocable Offers

Back 18

i)Options K's
ii) UCC 'Firm Offer'
iii)Detrimental Reliance
iv) Start of Preformance

Front 19

Irrevocable Offers:
Option K's

Back 19

i)Promise to keep offer open made by Offeror
ii)Offeree give consideration

Front 20

Irrevocable Offers::
UCC "Firm Offer" Rule

Back 20

i)K covered under UCC
ii)SIGNED WRITTEN PROMISE TO KEEP OFFER OPEN
iii)Offeror is MERCHANT
iv)Offer can be open for UP TO 3 MONTHS

Front 21

Termination of Offers:
Time Lapse

Back 21

i) Time stated expires
ii)Reasonable time lapses

Hint: 30 days+ probably a lapse. Watch for dates!

Front 22

Termination of Offers:
Offeror's Words or Conduct

Back 22

i) DIRECT STATEMENT to offeree not willing/able to K
ii)CONDUCT that Offeree is AWARE OF that indicates offeror not willing/able to K

Whether words or conduct, revocation of offer nmot effective until offeree RECEIVES IT.

IF OFFER IS ACCEPTED, CANNOT BE REVOKED

Front 23

Termination of Offers:
4 Types of Irrevocable Offers

Back 23

i)Options K's
ii) UCC 'Firm Offer'
iii)Detrimental Reliance
iv) Start of Preformance

Front 24

Irrevocable Offers::
Option K's

Back 24

i)Promise to keep offer open made by Offeror
ii)Offeree give consideration

Front 25

Irrevocable Offers:
UCC "Firm Offer" Rule

Back 25

i)K covered under UCC
ii)SIGNED WRITTEN PROMISE TO KEEP OFFER OPEN
iii)Offeror is MERCHANT
iv)Offer can be open for UP TO 3 MONTHS

Front 26

Irrevocable Offers:
Detrimental Reliance

Back 26

(a)Offeree detrimentally relied on the offer
(b)Reliance was reasonably foreseeable

Usually applies with general contractors and subcontractors (General uses sub’s bid to make General’s bid)

Front 27

Irrevocable Offers:
Start of Performance

Back 27

(a)Unilateral contract
(b)Requires performance as acceptance
(c)Offer irrevocable for a reasonable time to complete performance
(d)Must be more than mere preparation (if preparation, use detrimental reliance argument)

Front 28

Rejection of Offer: 5 ways

Back 28

1. Counter-offer
2. Conditional Acceptance
3. Additional Terms: Common Law (Mirror-Image Rule)
4. Additional Terms: UCC (Eliminates Mirror Image Rule
5. DEATH

Front 29

Rejection of Offer:
Counteroffer

Back 29

Terminates offer and becomes new offer. Offeree cannot accept original offer once counteroffer made

Valid counter-offer: Look for no '?' in MBE hypo
vs.
*Bargaining* does not terminate original offer (look for a '?' in MBE hypo)

Front 30

Rejection of Offer:
Conditional Acceptance

Back 30

Words of condition (if, provided, so long as, on condition that)

"Acceptance is expressly conditioned on these terms”

Front 31

Rejection of Offer:
Additional Terms at Common Law (Mirror Image Rule)

Back 31

(a) Acceptance must be the mirror image of the offer
(b) Acceptance that adds new terms is a counter offer

Front 32

Rejection of Offer:
Additional Terms in UCC

Back 32

UCC Eliminates Mirror Image Rule
(a)Issue Spotting
(i)Offer to buy or sell goods
(ii)Response adds additional terms

(b)Is there a contract?
(i)Response to offers that add terms are acceptances (seasonable expression of acceptance)
(ii)“Acceptance is expressly conditioned on these terms” is not a contract

(c)Is the term a part of the contract?
(i)If parties are merchants yes unless (1) materially changes the offer or
(2) offeror objects to the change

(ii)If one or both are not merchants, additional term is a proposal and must be separately accepted or rejected

Front 33

Rejection of Offer: Death

Back 33

Death of a party before acceptance terminates offer

Exception
(a) Option contract
(b) Part performance of offer to enter into unilateral contract

Front 34

Acceptance: Who Can Accept

Back 34

i) Who Can Accept?
(1) Acceptance only by person who knows about the offer and is the person to whom it was made
(2) Only way they can test is if there’s a reward

Front 35

Acceptance:3 Posssibilities

Back 35

1. Offeree performs
2. Offeree begins to perform
3. Offeree promises to perform

Front 36

Acceptance: Offeree Performs
(Notice Issue)

Back 36

(1) Acceptance depends on whether notice is required to accept
(2)Notice required if offeree has reason to believe that offeror will not learn of acceptance (look for offeror and offeree in different locations)
(3)Notice not required if offer dispenses with notice requirement

Front 37

Acceptance: Offeree Begins to Perform

Back 37

(1)Acceptance for bilateral contracts
(a)Where offer is open to method of acceptance
E.g., O offers P to paint home for $1000; offer silent as to acceptance. P starts painting. P has accepted

(2)Not acceptance for unilateral
(a) Offer states that acceptance only by performance
(b) Completion of performance is required
(c) E.g., O offers P to paint home for $1000; offer says performance required for acceptance. P starts painting. P has not accepted

Front 38

Acceptance: Offeree Promises to Perform

Back 38

(1) Most offers can be accepted by a promise to perform
(2) If offer states performance required, promise to perform is not enough for acceptance

Front 39

Mailbox Rule

Back 39

Offeror and Offeree are at different locations and there are conflicting communications
(1)Offer invites acceptance by mail (i.e., offer was mailed, says so, or silent as to acceptance)
(2)Acceptance effective when mailed
(3)NOTE: Revocation of offer only effective when received by offeree
(4)For multiple communications, rule is whichever gets there first controls

Front 40

Seller Sends Wrong Goods under UCC

Back 40

Gen'l rule: If seller sends wrong goods, it acts as seller’s acceptance& a breach
(2)Accommodation Exception: Acts as a counter offer and no breach if
(a) Seller sent goods as an accommodation and
(b)Explains why he sent the wrong goods

Front 41

Def: Consideration

Back 41

Bargained-for legal detriment
(a)“Bargained-for” means asked for by the promisor in exchange for promisor’s promise
(b)“Legal detriment” means any detriment

Front 42

4 Forms of Consideration

Back 42

(a) Performance
(b) Forbearance
(c) Promise to Perform
(d) Promise to Forbear

Front 43

Illusory Promise

Back 43

Almost always a wrong answer

Promise in which the promisor has not committed herself in any manner, i.e., no new detriment
(3) E.g., A agrees to sell car to B unless A changes his mind. That’s illusory. If the facts said “. . . unless A notifies B otherwise” would not be illusory

Front 44

Past Consideration

Back 44

(1) General Rule
(a) Past consideration cannot be consideration, (can’t bargain for something that already happened:
ex. A saved B’s life. C, B’s dad, promises to pay A $5000. Later, C changes his mind. Promise is not legally enforceable

(2)Very Limited Exception
(a) Promisor expressly requests something and
(b) Promisor knows that promisee expects payment
(c) E.g., C asks A to save B’s life. After A saves B’s life, C promises to pay A $5000. Later, C changes his mind. Promise is legally enforceable

Front 45

Common Law: Preexisting Contractual or Statutory Duties

Back 45

Common Law General Rule
(a)Doing what you were already required to do is not consideration for a promise to do it

(2)Exceptions to Common Law General Rule
(a)Addition to or Change in Performance Exception
(b)Unforeseen Difficulty so Severe Excuses Performance
Ex: DJ's equipment gets rained on, doesn't work

Third Party Promise to Pay for Preexisting Obligations or Duties are Enforceable

Front 46

UCC Rule: Preexisting Contractual or Statutory Duties

Back 46

GOOD FAITH TEST for changes in existing sale of goods contract

E.g., A agrees to sell toys to B for $1000. Before delivery, A says he can’t do it for less than $1500 because of a shortage. B agrees to pay the $500. B’s promise is enforceable.

Front 47

Promise to Forgive Balance of Debt

Back 47

(1)If debt is due and undisputed, part payment is not consideration for forgiving the debt
(2)If debt is not due, early payment is a new detriment

Front 48

Written Promise to Pay Debt Barred by Technical Defense (Statute of Limitations): Consideration Substitute

Back 48

(1)Written Promise to satisfy obligation that is unenforceable because SOL has run, IS ENFORCEABLE WITHOUT CONISDERATION
(2) Elements
(a)Existing debt
(b)Can’t enforce it because of statute of limitations
(c)In writing
(d)Promise is to pay a new amount to satisfy the debt (usually less than the original debt)

Front 49

Promissory Estoppel: Consideration Substitute

Back 49

(1)Use only if no other possible consideration
(2)Don’t choose this if it’s in the (A) slot
(3) Elements
(a) Promise
(b) Reliance is reasonable, detrimental, and foreseeable
(c) Enforcement necessary to avoid injustice
(4) Distinguish Consideration
(a) Parties ask each other to do something = consideration
(b) Acts of reliance = promissory estoppel

Front 50

Lack of Capacity:

Back 50

(1) Infants
(2) Mentally incompetent
(3) Intoxicated unless other person knows

ii) Consequences
(1) Party without capacity can avoid or disaffirm the contract
(2) Party without capacity affirms by retaining benefit after gaining capacity

iii) Liability for Necessaries
(1) Food, clothing, medical care, shelter
(2) Liability based on quasi-contract law

Front 51

Statute of Fraud: What K's are covered?

Back 51

1)Promise in Consideration of Marriage
2)Promises by Exec/Admin Pay
Decedant's Debts Personally
3. Service K's Incapable of Being Performed w/in 1 year or Less
4. Transfers of Real Estate Interest (w/exception of leases of 1 year or less)
5) Sale of Goods for $500 or more.

Front 52

Statute of Fraud: Promise in Consideration of Marriage

Back 52

(a) Not promise to marry
(b) E.g., H claims that W agreed to get rid of property before marriage. SOF applies

Front 53

Statute of Frauds: Promises by Exec/Admin Pay
Decedant's Debts Personally

Back 53

Promise to pay obligation of decedent from personal funds
E.g., Funeral home says that Executor agreed to pay funeral home out of pocket. SOF applies

Front 54

Statute of Frauds: Service K's Incapable of Being Performed w/in 1 year or Less

Back 54

(a) Specific Time Period (i.e., “3 years” = statute applies
(b) Specific Time of Performance (i.e., contract date is Jan. 1 1999; perform by Feb. 2000 = statute applies)
(c) Tasks Excluded (i.e., nothing said about time): Focus on what might have happened with unlimited resources
(d) Contracts “For Life” Excluded

Front 55

Statute of Frauds: Transfers of Real Estate Interest

Back 55

Exception of leases of 1 year or less.

Make sure it is a TRANSFER of real estate, not just construction

Front 56

Statute of Frauds:Guarantees (Answering for Debts of Others)

Back 56

a) “I will pay you” does not come within the statute of frauds
(b) “I will pay you if A doesn’t” comes within the statute of frauds
(c) Usually a wrong answer on the MBE
(d) Exception: Main purpose for the promise is to benefit the guarantor

Front 57

Statute of Frauds: Satisfying the SOF Overview

Back 57

Performance
or
Writing

Front 58

Statute of Frauds: Satisfaction Through Performance: Service K's

Back 58

(i) Full performance satisfies the statute of frauds
(ii) Part Performance does not satisfy statute

Front 59

Statute of Frauds: Satisfaction Through Performance: UCC K's

Back 59

i) Ordinary Goods
1.Delivered Goods: part performance satisfies the state
2.Undelivered goods: part performance does not satisfy

(ii)Specially Manufactured Goods
1. Custom made goods and
2. Substantial beginning

Front 60

Statute of Frauds: Satisfaction Through Performance: Real Estate Transfer

Back 60

(i) Full cash payment does not satisfy the statute of frauds
(ii) Part performance and two of the following satisfies:
1. Payment
2. Possession
3. Improvements

Front 61

Writings that Satisfy the statute of frauds

Back 61

(a)Common Law
(i) All material terms: who and what?
(ii) Signed by the party to be charged
(b) UCC
(i) Quantity: How many?
(ii) Signed by the party to be charged
(iii) Exception to Signature Requirement
1. Merchants and
2. Party claiming no contract receives a writing with the quantity term
3. Fails to respond within 10 days

Front 62

Authorization to Enter into Contract for Someone Else: Equal Dignity Doctrine
(SOF side issue)

Back 62

Must be signed and in writing if the original contract must have been also, like due to SOF rqmt.

E.g., A sends B to sign a one year lease agreement for A. No written authorization requirement. If the lease agreement was for 2 years, need written authorization.

Front 63

Contract Modification:
When is Written Modification Required
(SOF side issue)

Back 63

(i)Look at the deal with the modification as a whole
(ii) If deal with the change is within statute, then modification must be in writing
(iii) E.g., A leases building to B for one year. A claims that they later agreed to a three year lease. Modification must be in writing (time for contract more than a year now)
(iv) E.g., A sells 600 toys to B for $600. B claims that they modified the price to $100. Modification need not be in writing because no longer $500 or more.

Front 64

Modification Clause in Contracts
(SOF side issue)

Back 64

(i) Common Law
1. Disregard the writing
2. Ignore the modification clause

(ii) UCC Rule:
Modification clause is effective unless waived
3. Apply the Written Modification Rule

Front 65

Illegality

Back 65

i)Illegal Subject Matter: agreement is void
ii)Legal subject matter but illegal purpose: agreement is enforceable by the person who did not know of the illegal purpose

Front 66

Misrepresentation

Back 66

i) False Assertion of fact or b Concealment of facts

ii) Effect
(1) Fraudulent or material misrepresentation of terms is voidable
(2) Misrepresentation of nature of contract is void

Front 67

Duress

Back 67

Improper threat to breach unless new deal made and

Other party has no reasonable alternative source of supply

Front 68

Unconscionability

Back 68

i) Unfair surprise and oppressive terms
ii) At the time agreement made
iii) Determined by the court

Front 69

Ambiguity

Back 69

i) Material term open to at least two reasonable interpretations
ii) Each party attaches a different meaning to the term
iii) Neither party knows or has reason to know that the term is open to two interpretations

Front 70

Mutual Mistake of Fact

Back 70

(1)Both parties mistaken
-Mistaken as to what it is = no contract
-Mistaken as to what it is worth = contract
AND
(2)Basic assumption of fact
(3)Materially affects the agreed exchange

Front 71

Unilateral Mistake of Fact

Back 71

General Rule: Party cannot avoid a contract for mistake made by only one party

Exceptions
(a) Mistaken party can avoid contract for obvious mistakes known to the other party
(b) Mistakes discovered before significant reliance by the other party

Front 72

Vocabulary for Parol Evidence Rule: Integration, Partial, Complete, and Merger Clause

Back 72

i)Integration: final agreement
ii)Partial Integration: written and final, but incomplete
iii)Complete Integration: written, final, and complete
iv)Merger Clause: “This is the complete and final agreement of the parties”

Front 73

Triggering Facts for Parol Evidence Rule

Back 73

i)Written contract that court finds is the final agreement and
(1)Oral statement made at the time the contract was signed
OR
(2) Earlier oral or written statements by the parties to the contract

Front 74

Parol Evidence Scenario: Changing the Written Deal

Back 74

(1) Partial or complete integration
(2) General Rule: can’t change the written deal based on earlier agreements that are inconsistent with the terms of the contract
(3)Exception: clerical errors

Front 75

Parol Evidence Scenario: Establishing a Defense to the Enforcement of the Written Deal

Back 75

(1) Partial or complete
(2) Earlier words of parties to determine defenses like misrepresentation, fraud, duress

Front 76

Parol Evidence Scenario: Explanatory Terms

Back 76

(1) Despite the parol evidence rule,
(2) Parol can be considered to resolve ambiguities in the written contract

Front 77

Parol Evidence Scenario:
Adding to the Written Deal

Back 77

(1) Partial Integration: agreements with consistent additional terms admissible
(2) Complete Integration: agreements with terms that would naturally and normally be in a separate agreement are admissible

Front 78

K Terms: Conduct & Course of Performance

Back 78

In order of Importanc
i)Course of Performance: Same Parties, Same Contract
ii)Course of Dealing: Same Parties, different but similar contract
iii)Custom & Usage: different but similar people, different but similar contract

Front 79

K Terms: UCC Gap Fillers:
Delivery Obligations

Back 79

(1) No agreement
(a) Place of delivery is sellers place
(b) Exception: Both parties know that the goods are some place else (in which case, this place would be place of delivery)

(2) Agreement about Place of Delivery by Common Carrier: Seller’s Obligation
(a) Shipment Contracts
(i) Seller gets the goods to the carrier
(ii) Makes reasonable arrangements for delivery
(iii) Notifies the buyer

(b) Destination Contracts
(i) Obligation is complete when goods arrive at the buyer’s location

(c) Determining Shipment or Destination
(i) FOB Seller’s Location = Shipment
(ii) FOB Buyer’s Location = Destination

Front 80

K Terms: UCC Gap Fillers:
Risk of Loss

Back 80

K formed; before buyer gets goods; goods damaged/ destroyed; B and S not to blame)
(1) Agreement Controls (if there is one; if not, go through 2-4 below)
(2) Any Breach: Breaching party has the risk of loss
(3) Delivery by Common Carrier other than Seller: ROL shifts once seller completes delivery obligations (see above)
(4) No Agreement, No Breach, No Delivery by Common Carrier
(a) Merchant Seller: risk of loss shifts to buyer when buyer receives the goods
(b) Non-merchant Seller: When seller tenders the goods (makes them available

Front 81

Express Warranties of Quality

Back 81

(a) Words of promise, description, or facts
(b) Puffing excluded (i.e., opinions)
(c) Samples and Models are express warranties warranting that the goods will be like the sample or model
(d) Correlates with parol evidence rule

Front 82

Implied Merchantability

Back 82

(a) Any merchant that deals with goods of that kind
(b) Goods fit for ordinary purpose

Front 83

Implied Fitness

Back 83

(a) Buyer has particular purpose
(b) Relies on seller to select suitable goods
(c) Seller has reason to know of purpose and reliance
(d) Warrants that goods will fit the particular purpose

Front 84

Warranty Disclaimers

Back 84

(a) Eliminates IMPLIED Warranties
(b) As is or with all faults (for both implied warranties) or
(c) CONSPICUOUS language of disclaimer mentioning merchantability (for merchantability)

Front 85

Warranty Limitations

Back 85

(a) Can limit implied and express warranties
(b) Test is unconscionability at the time of the contract
(c) Limitation is prima facie unconscionable if breach of warranty of consumer goods that results in personal injury

Front 86

UCC K Performance: General Rule and Exception

Back 86

i)General Rule: Seller must make perfect tender
ii) Cure: Seller gets opportunity to cure if:
(1) Time of performance has not yet expired (sends wrong goods before deadline) or
(2) Time of performance has expired and seller has reasonable grounds for believing that the improper tender would be acceptable

Front 87

UCC Performance:
Rejection of Goods

Back 87

(1) Rejection must occur before acceptance (otherwise, must revoke acceptance)
(2) General Rule: no perfect tender = ability to reject
(3) Exception: Installment contracts—
(a) Contract requires or authorizes
(b) Delivery in separate lots
(c) Separately accepted

Front 88

UCC Performance: Acceptance

Back 88

(1) Express Acceptance (“I accept”)
(2) Payment General Rule: Payment without opportunity for inspection is not acceptance
(3) Exception: buyer retains good without objection after a opportunity for inspection (multiple weeks)
(4) Effect: Buyer cannot reject if he accepts

Front 89

UCC Performance: Revocation of Acceptance

Back 89

(1)Nonconformity substantially impairs the value of the goods
(2) Excusable ignorance and
(3) Revocation comes within a reasonable time after discovery of nonconformity

Front 90

UCC Performance:Payment

Back 90

(1) Cash unless otherwise agreed
(2) Buyer can pay by check
(3) Seller can reject the check but must give buyer reasonable time to get cash

Front 91

Conditions of Performance:
Terminology

Back 91

(1) Condition: Mutually agreed upon promise modifier
(2) True Condition: event beyond the influence of either party that affects duty to perform
(3) Covenant: E.g., “Seller covenants that it will sail the next day”
(4) Condition with Express Covenant: “Seller covenants that it will sail the next day and Buyer promises to pay if seller sails the next day”
(5) Condition with Implied Covenant: “This sale is conditioned on B’s obtaining an 8% mortgage” (B implies a covenant to get an 8% mortgage)

Front 92

Conditions of Performance:
Standard for Satisfying Express Condition

Back 92

(1) General Rule: Strict compliance with the condition
(2) Exception: Condition based on approval by one of the contracting parties
(a) Satisfied if reasonable person would approve
(b) Exception: art or other matters that are inherently discretionary

Front 93

Excusing Express Condition

Back 93

(1) Estoppel
(a) Identify the person who benefits from or is protected by condition
(b) See if that person gave up the benefit or protection with a statement before the condition was to occur and requires a change of position
(2) Waiver
(a) Identify the person who benefits from or is protected by condition
(b) See if that person gave up the benefit or protection with a statement after the condition was to occur and does not require a change of position

Front 94

Constructive Condition

Back 94

(1) Identification
(a) Keyed to the order of performance
(b) E.g., silent as to the time of payment: A goes to get a haircut. Completing the haircut is a constructive condition to payment.
(2) Rule: Substantial performance satisfies the condition (compare express condition, where strict compliance is required)
(3) Exception: Divisible Contract
(a) Divides performance of each party into the same number of parts
(b) Substantial performance applied to each divisible part of the contract

Front 95

5 EXCUSES OF NONPERFORMANCE

Back 95

1. Excuse by Reason of Breach
2. Anticipatory Repudiation 3. Inability to Perform
4. Excuse by Later Contract
5. Excuse by Later Unforeseen Event

Front 96

Excuse of Non-Performance: By Reason of Breach

Back 96

i) Sale of Goods: perfect tender rule
ii) Common Law: Material Breach (question of fact)

Front 97

Excuse of Non-Performance: Anticipatory Repudiation

Back 97

(1) Unambiguous statement
(2) Repudiating party will not perform
(3) Mad before time that performance due
(4) Excuses non-repudiating party’s duty to perform and give immediate claim for damages unless non-repudiating party already performed
(5) Can be retracted if timely. If timely, performance can be delayed until adequate assurance is provided

Front 98

Excuse of Non-Performance: Inability to Perform

Back 98

(1) Agreement for services in exchange for something other than money
(2) Before performance, the thing is gone
(3) Performance excused for party that was going to get the thing

Front 99

Excuse by Later Contract:
Rescission (Cancellation)

Back 99

(1) Mutual rescission before performance ends excuses performance
(2) Mutual rescission after performance ends does not excuse performance

Front 100

Excuse by Later Contract: Accord and Satisfaction (substituted performance)

Back 100

(1) Accord: agreement to an existing obligation to accept different performance to satisfy the existing obligation
(2) Satisfaction: performing the newly agreed performance to fulfill the obligation
(3) Accord Alone: Suspends enforcement of the original obligation to provide time to perform the accord
(4) No Satisfaction: Claimant can sue under the old obligation or the accord, BUT NOT BOTH

Front 101

Excuse by Later Contract:
Modification(Substituted agreement)

Back 101

(1) Mutual agreement
(2) Accept a different agreement to satisfy an existing obligation

Front 102

Excuse by Later Contract: Novation

Back 102

iv) Novation (substituted party)
(1) Mutual agreement
(2) Substitute a new party
(3) Performs the same performance
(4) Excuses the party that was substituted

Front 103

Excuse by Later Unforeseen Event

Back 103

(1) Event after contract formation but before complete performance
(2) Unforeseen
(3) Makes performance impossible, commercially impracticable or frustrates the purpose of the performance
(4) Unforeseen event never excuses buyer’s performance if the buyer has the risk of loss

Front 104

Excuse by Death

Back 104

(i)Death of a party to contract after formation does not excuse performance unless decedent was a special person
(2) E.g., hired notably architect to design building and he dies. Performance excused.

Front 105

Excuse by Subsequent law or regulation

Back 105

(1) Later law makes performance of contract illegal = excuse by impossibility
(2) Later law makes mutually understood purpose of contract illegal = excuse by frustration

Front 106

Damages: Punitive and Liquidation

Back 106

i) NO PUNITIVE DAMAGES (always a wrong answer)

ii) Liquidated Damages
(1) Amount of possible damages for later breach is difficult to determine
(2) Provision is a reasonable forecast of possible damages
(3) E.g., single sum liquidation provision is suspect

Front 107

General Damages Approach

Back 107

(1) Who’s the P?
(2) What would P receive if contract was performed?
(3)What did  actually get?

Front 108

Damages: General Rule

Back 108

(1) Expectation interests of the P
(2) Put the P in a position she would have been had the contract been performed

Front 109

Incidental Damages

Back 109

(1) Costs incurred in dealing with the breach

E.g., costs of finding replacement

Front 110

Foreseeable Consequential Damages are SPECIAL DAMAGES

Back 110

(1) Special damages where LOSS IS SPECIFIC to THIS PARTICULAR P
(2) Must be reasonably contemplated by both parties at the time of the contract

Front 111

UCC: Damages

Back 111

i)Seller breach, buyer keeps goods:
Fair market value if perfect tender – fair market value as delivered

ii) Seller breach, seller has the goods: Replacement price – contract price

iii) Buyer breaches, buyer has the goods: Seller gets contract price

iv) Buyer breaches, seller has the goods: Contract price – market price and PROVABLE lost profits
(1) Lost Profits
(a) Regular inventory
(b) Breach followed by resale at the same price
(c) Provable lost profit is recoverable

Front 112

Equitable Remedy: Specific Performance

Back 112

(1) Always specific
performance for real estate
(2) Specific performance for goods if
(a) Unique goods
(b) Antiques, art, custom-made goods

(3)Contracts for Services
(a)No specific performance

(b)Injunction to stop party from competing: negative specific performance

Front 113

Equitable Remedy:Reformation

Back 113

(Almost Always Wrong Answer)
(1) For mistake (clerical errors) or
(2) Fraudulent misrepresentation

Front 114

Equitable Remedy: Adequate Assurance of Future Performance

Back 114

(1) One party learns something after the contract
(2) Reasonable grounds for insecurity about the other party’s performance
(3) Written demand for adequate assurance

Front 115

Equitable Remedy: Reclamation

Back 115

(1) Right of unpaid seller to get goods back from buyer if
(a) Buyer is insolvent at the time he receives the goods
(b) Seller demands return
(i) Within 10 days of receipt or
(ii) Reasonable time if buyer expressly said he was insolvent before delivery
(c) Buyer still has the goods at the time of demand

Front 116

Good Faith Purchasers

Back 116

(1) Owner leaves goods with seller who sells goods of that kind
(2) Seller wrongfully sells the goods to third party
(3) Owner can’t sue good faith purchaser

Front 117

Third Party Beneficiaries:
Terminology

Back 117

(1) Third party beneficiary contract:
two parties contracting with the intent of benefiting a third party (e.g., insurance policies)
(2) Third party beneficiary: not a party to the contract BUT ABLE TO ENFORCE!
(3) Promisor: person who makes the promise that benefits the third party (e.g., insurance company)
(4) Promisee: person who obtains the promisee that benefits the third party (e.g., policy holder)
(5) Intended beneficiary: named beneficiary with contract rights
(6) Creditor beneficiary: Promisee owes the beneficiary money
(7) Donor beneficiary: all others (this is usually the case)

Front 118

Third Party Beneficiaries:
Cancellation or Modification

Back 118

(1) Can’t cancel or modify after beneficiary knows about the contract
(2) If the rights have vested, contract can’t be modified or cancelled without consent of beneficiary or the contract provides otherwise

Front 119

Third Party Beneficiaries: Who Can Sue?

Back 119

(1) Beneficiary can sue promisor
(2) Promisee can sue promisor
(3) Donee beneficiary cannot sue promisee but creditor beneficiary can sue on the pre-existing debt

Front 120

Third Party Beneficiaries:
Defenses to Lawsuit

Back 120

(1) If beneficiary sues promisor, promisor can assert defenses it has against promisee
(2) E.g., policy holder doesn’t pay; beneficiary sues insurance company; company can defend by saying promisee didn’t pay

Front 121

Third Parties: Assignments

(define assignment, assignee/assignor, obligor)

Back 121

Assignment: transfer of rights under contract in two steps: (1) contract between only two parties; (2) one of the parties later transfers rights under that contract to a third party
(2) Assignor: transfers rights
(3) Assignee: not a party but able to enforce
(4) Obligor: the other party to the contract

Front 122

Third Parties: Assignments:
Limitations by Contract

Back 122

(1) Prohibition: Clause takes away right to assign but not the power to assign. Assignee can still enforce if he did not know about the prohibition (“Rights hereunder are not assignable”)

(2) Invalidation: Clause makes any assignment void (“Assignments are void”)

Front 123

Third Parties: Assignments:
Limitations under Common Law

Back 123

(1) Assignment invalid if it substantially changes the duties of the obligor
(2) Assignment of the right to payment is generally ok
(3) Assignment of other performance rights generally not ok

Front 124

Third Parties:Requirements to Assign

Back 124

(1) Language of present assignment
(2) 'I assign'is sufficient;
“I promise to assign” or something similar is no good

(3)NO CONSIDERATION is required

Front 125

Third Parties:Rights of Assignee

Back 125

(1) Assignee can sue the obligor
(2) Obligor has the same defenses against the assignee as it would have against the assignor
(3) Obligor can continue to pay assignor until obligor learns of the assignment

Front 126

Third Parties:Multiple Assigments

Back 126

(1) Gratuitous Assignments: Last assignee wins
(2) Assignments for Consideration: First assignee for consideration wins
(3) Warranty: Assignor makes warranty that the rights assigned are assignable and enforceable

Front 127

Third Parties: Delegation of Duties Def.

Back 127

Def: Party to a contract transfers work under that contract to a third party

E.g., P contracts to paint O’s house for $1000. P and X agree that X will paint O’s house

Front 128

Third Parties:
Assignment vs. Delegation

Back 128

(1) Assignment: Party gets rights to payment or performance
(2) Delegation: Party gets work to do
(3) E.g., P contracts to paint O’s house for $1000. P and X agree that X will paint O’s house. X will get the $1000 from O. This is both an assignment and a delegation.

Front 129

Third Parties: Delegable duties

Back 129

(1) General Rule: contractual duties are delegable
(2) Exception
(a) Contract prohibits delegation
(b) Contract prohibits assignments
(c) Contract calls for very special skills
(d) Contract calls for very special reputation

Front 130

Third Parties:Consequences of Delegation

Back 130

(1) Delegating party always remains liable
(2) Delegatee liable only if she receives consideration from delegating party
(3) Delegation and assignment combined can create a third party beneficiary relationship

Front 131

Third Party Beneficiary Quick Rules/Analysis

Back 131

i) Did the Right Vests?
(1) Detrimental reliance
(2) 3d party accepts in a manner expressly stated by the agreement
(3) 3d party files lawsuit

ii) Creditor or Donee Beneficiary?
(1) Facts are silent, donee beneficiary
(2) Donee beneficiary can only sue promisor; Creditor beneficiary can sue promisee

iii) 3d party has no greater rights than the original parties

Front 132

Assignment and Delegation Quick Rules/Analysis

Back 132

i)“Assign contract” = assignment and delegation;

2) “I assign” = assignment; read the facts for delegation

3. When rights are assigned, assignor cannot receive further benefits

4. When duties are delegated, delegating party is secondarily liable